Resource Commodities

K2 Gold (TSX-V: KTO) Chairman John Robins on Assembling a World-Class Team for the Exciting Wels Project

March 15, 2017

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is Chairman and Director of K2 Gold (TSX-V: KTO), Mr. John Robins. Mr. Robins is a professional geologist based in Vancouver with nearly three decades of experience as an independent exploration geologist and entrepreneur. He was the co-founder of several companies in the resource space, and was the founder of Kaminak Gold, where he served as the company's first president and as its executive chairman, leading the company from being a grassroots explorer to a developer. Kaminak, of course, was eventually bought out by Gold Corp for approximately $520 million, the largest mining takeover in Yukon's history. Now, Mr. Robins is back in the Yukon as Chairman and Director of K2 Gold. I could continue outlining Mr. Robins' many accomplishments, but I'm excited to speak with him, so let's get to it.

Mr. Robins, thank you for your time today.

John Robins: It's my pleasure.

Gerardo Del Real: Most people that have spent any amount of time in the resource space are familiar with you and your past successes, but for those that are new to the space, would you please share with us a bit more about how you got started in the natural resource space?

John Robins: Well, I guess if I go way back, my father was a forest ranger and an amateur prospector, so I spent most of my early years outdoors, following in his footsteps, prospecting and basically traipsing around a lot of Western Canada and the Southwestern US. I went into geology at the University of British Columbia, and basically went straight into a career of prospecting and staking claims to start with, and that's kind of just grown from there.

Gerardo Del Real: Excellent. Excellent. Now, this sector of course, it's extremely cyclical. You've managed success in both bear and bull markets. I mentioned earlier that you took Kaminak from a grassroots explorer to discovery and eventually, of course, it was acquired by Gold Corp for $520 million. Now you're back in the Yukon with K2 Gold. What do you look for in a project and a team when you're deciding whether or not you want to be involved with a company?

John Robins: Well I guess first and foremost, when you're talking about project-wise, it has to be a project that's got the potential to move the dial. It's got to be, you know, whether it's gold or base metals, it's got to be a project that's big enough to basically ... I don't like to overuse the word "world-class," but it has to be a significant size project, but it also has to be in a region that's both favorable from a resource development standpoint. There's no point finding a great deposit in an area where from a regulatory standpoint you're not going to be allowed to build it. You've got to have the right geology, the right geological setting. You need a certain amount of infrastructure or at least the grade to overcome those infrastructure challenges, and you've got to be in an area, as I mentioned, where you can develop these. Whether it's country risk, environmental, first nations issues, things like that.

Then when it comes to the team, obviously you can have the greatest project in the world, but if you don't have a solid team, both from a professional standpoint and a standpoint of understanding the market, and working with people that are ethical and have high standards, those are all the components. Without any one of those components, a project may not succeed, but the team, in a way, is almost as important as the project.

Gerardo Del Real: Excellent. That actually brings me to my next question. With K2 Gold you've obviously put together an excellent team. I mentioned that you're back in Yukon with the Wels Project, which coincidentally, or not coincidentally, is not too far away from the coffee deposit, in an area that's previously unknown to be mineralized. Can you share with me why this team and why this project?

John Robins: Well I guess to start with, Yukon is one of the last great frontiers for mineral exploration in the world. It's got fantastic geology. It's got a long history of mining. Of course, it's the home of the Klondike Gold Rush, which produced upwards of 20 million ounces of placer gold. It's a jurisdiction that understands mining. It's in an area that has low country risk, which is becoming ever more important these days. With the sale of Kaminak's Coffee Project to Gold Corp, we built up a tremendous amount of goodwill in the territory. I know the Premier, the Deputy Premier. I know most of the ministers in the Yukon. We built a fantastic relationship with First Nations. We're known as a group that have the highest environmental standards, so we've really built up a tremendous reputation there.

I wanted to lever off that, because we already have a good reputation there. I spent upwards of 20 years on and off working in the Yukon, so we understand the Yukon. In particular, when it comes to Wels, as you mentioned, Wels is located in an area that was previously not recognized to be an area that had high mineral potential, because it was poorly mapped in the original days. We're now taking control of a project that's at the very early stages, but looks like it has the potential to yield a very, very significant deposit there. Some of the early results there are fantastic, and we're looking at an intrusive posted gold system, you know, where some of the grades have been up to 8 grams over 45 meters entrenching. Those are spectacular numbers in an area, in a project that's never had any work done in it in the past. Those are the sort of things that really get me excited.

Gerardo Del Real: Well, that is exciting, and considering the reputation and the background and the past successes, you currently have, K2 Gold has a tiny, fully-diluted market cap of I believe less than 10 million Canadian. You have only approximately 22 million fully-diluted shares outstanding, and you obviously have a share structure which will allow for future financings at higher prices, which of course can support new deals, and/or aggressive development of the Wels property, or both. What is the strategy for K2 Gold moving forward?

John Robins: Well, you touched on one aspect. I mean, when we created K2, we really wanted to make sure right from the onset that we had really good structure. We've got a very experienced management team and board of directors. You know, we control a very high percentage of the shares of the company, so one of the really important things that I look for in an investment is, how much do the insiders own of their company? I don't mean, have they got a whole bunch of a really cheap stock? Have they participated in all financings, right? Have they put their money where their mouth is? In this case, we own probably collectively north of 50% of the stock and we've been big players in every financing there. Good structure, which allows us to minimize dilution going forward. We've got a great team. Stephen Swatton, our CEO, used to be Global Head of New Business and Research for BHP Billiton Exploration. I've known him for years.

Craig Roberts on our board, mining engineer, a lot of experience both in the banking side, research. Gary Freeman, well-known person in our industry. Freddie Leigh, one of our directors. Allison Armstrong, who heads up our CSR and Environmental, she led our whole initiative in the Yukon for that. You know, we've got a fantastic team, and Wels is right now our flagship project, but our goal is to continue to lever off our experience up there and build a portfolio of projects within the Yukon and northern British Columbia.

Gerardo Del Real: Well, 2017 is shaping up to be a pretty exciting year for K2 Gold, obviously looking forward to that. Let me ask you a general question. You've been involved in the natural resource space for nearly three decades. You've been very successful obviously. What are your thoughts on the current state of exploration and the precious metals space in general?

John Robins: Well, you know, you can't have discoveries without exploration. If you don't have discoveries, then that impacts the supply side. It doesn't matter whether it's gold or base metals or what have you. In the last six years, we've seen very little mineral exploration conducted worldwide. We're starting to see a bit of a turnaround right now, but this dearth of exploration in the last half a decade has seriously impacted the discovery cycle, and we've seen very few discoveries. The Kaminak discovery was made just before the market kind of rolled over, and it was one of the main transactions that's happened in the last year, on the basis of a new discovery being taken over. But when you really look at the broader picture, there's virtually no new discoveries being made right now, because it takes several years to feed into what ultimately results in a discovery. A lot of money, a lot of time and effort on the exploration side.

I think that bodes well for commodity prices in general. Gold is obviously far more complex, and I don't profess to really understand, you know, where the price of gold is going to go. But certainly on the supply side, without exploration you don't have discovery, and without discovery you don't have new material coming into play. I'm very bullish. I think right now we're seeing there's equity financings being made, there's companies who are starting to get back at it again, but you're seeing a bit of a shift from years gone by. It's the groups that have the technical teams, that have the track record of success, they're the ones that are getting the money right now, and they're the ones to bet on going forward, I think.

Gerardo Del Real: Excellent. I know there was a big misallocation of capital in the last bull cycle, and I think a lot of execs are still paying for sins of the past, and so I think all those new discoveries hopefully that are made here in the future will command a premium that we haven't seen in quite a bit. Mr. Robins, it's been an absolute pleasure. Is there anything that you'd like to add.

John Robins: No. I don't think so. I think it's a great industry to be in. We went through some pretty tough times in the last six years, but I think we've got some fantastic times in front of us here, and I look forward to continuing to work in the Yukon, and hopefully as our company is K2, hopefully we'll repeat our previous successes there.

Gerardo Del Real: Absolutely. I encourage everybody to go to the website, which is K2Gold.com. It's a company with an exciting project, a world-class management team. Obviously a lot of past successes, and a phenomenal share structure, so it's early days, but I, again, encourage everybody to go to the website K2Gold.com. Mr. John Robins, thank you so much for your time.